Business sentiment breaks six-month downward trend in Q4 2025

IT and Banking sectors are surging with confidence, whilst Retail and Hotels remain in the "challenged" zone.

The overall business sentiment is showing early signs of stabilisation as the Business Sentiment Index breaks a six-month downward trend.

“Business sentiment is beginning to brighten in Q4 [fourth quarter] 2025, with rising confidence in both Singapore’s economic performance in 2025 and the anticipated economic trajectory for 2026,” the Singapore Business Federation (SBF) said in its National Business Survey 2025 – Q4 Business Sentiments Edition.

According to the analysis, the Business Sentiment Index (BSI) rose by 1.2 points to 53.4 in Q4 2025, breaking a six-month downward trend. This return to a neutral to slightly positive range aligns with Singapore’s strong Gross Domestic Product (GDP) growth in Q4 2025, suggesting macro conditions are stabilising after earlier volatility.

The EY-Parthenon CEO Outlook Survey also reported that 90% of CEOs in Singapore are optimistic about the local economy over the next 12 months, despite growing uncertainty due to trade tensions, volatility and muted global economic projections.

The SBF found that the greatest improvement in overall sentiment was in the IT & Related Services sector. Banking & Insurance and Other Financial & Insurance Activities sectors also performed positively, whilst Retail Trade, Real Estate Activities, and Hotels, Restaurants & Accommodations remain the most challenged sectors.  

When it comes to profitability, expectations improved from 48.5 to 52.1, reversing declines seen in the second (Q2) and third (Q3) quarters across companies.

“The IT & Related Services sector recorded the strongest rebound, whilst Retail Trade, Education, and Administrative & Support Service Activities remain relatively less positive on profitability expectations,” SBF said.

The same trend was also reported by the EY-Parthenon poll, with 28% of CEOs expecting their companies to post 10% to 19.9% growth in the next 12 months. There were also 65% who expect 3% to 9.9% increase in their annual revenue growth, and 5% who projected a flat revenue movement.

SBF also found that growth confidence increased from 55.4 to 57.7, the highest level recorded in 2025.

“Gains were driven primarily by small and medium enterprises, whilst confidence among large companies remained stable. IT & Related Services, Other Service Activities, and Banking & Insurance registered the strongest sectoral improvements, whilst Retail Trade reported softer confidence,” SBF said.
Access to financing remained steady at 54.7, indicating that financing conditions have not eased despite improved growth expectations. Hiring expectations were also stable at 56.5, signalling that most businesses intend to maintain current workforce levels.

“Sentiment towards government policies moderated to 55.7, with large companies reporting a more pronounced decline. Sectoral sentiment is strongest in IT & Related Services and Banking & Insurance, whilst Retail Trade, Real Estate, and Hotels, Restaurants & Accommodations trail behind,” SBF said.

Meanwhile, cost pressures showed the sharpest increase amongst BSI components, with expectations rising from 56.6 in Q3 2025 to 71.0 in Q4 2025.

“Most businesses anticipate higher costs over the next six months, particularly in sectors already facing tighter financing conditions such as Retail Trade and Administrative & Support Services, indicating that margin pressures may intensify even as demand conditions show signs of improvement,” SBF said.